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MUMBAI: Housing Development Finance Corp (HDFC) posted a 7% increase in thirdquarter net profit, which the nation's largest mortgage lender said was hurt by lower returns on sale from investments and higher provisions.

Net profit rose to Rs 1,521 crore in the quarter-ended December 31 from Rs 1,425 crore a year earlier.

The results were affected by four factors - higher provisions, lower profit on sale from investments, lower income from leased properties and lower interest rates, vice-chairman Keki Mistry said, while also pointing to a pick-up in the sector. “We are seeing growth from non-individual segments picking up, mainly from lease rental discounting and construction,“ he said.

HDFC posted 19% growth in demand for loans to Rs 2.48 lakh crore in the past quarter. Loans to individual borrowers rose 23%, while those to nonindividual customers, who include developers and companies, grew 10%. This is the first time in this financial year when HDFC has seen an increase in its non-individual loan book. Most of the non-individual demand has come from Mumbai and Bengaluru. Individual loan book has, meanwhile, been growing over the quarters.

HDFC saw robust demand from Mumbai where the average loan ticket size was Rs 40 lakh against the country average of Rs 25 lakh. Of the total loan book, individual loans comprised 73%. Net interest income -the difference between interests earned and paid out - climbed nearly 9% to Rs 2,255 crore. Net interest margin (NIM) for the quarter was 3.85%, down from 3.93% a year earlier. Interest rates have fallen as the Reserve Bank of In dia has cut its policy rate by 1.25 percenta ge points in the past year.

Asset quality remained stable with gross non-per forming loans at 0.72% of the loan portfolio as of December 31, against 0.71% in the previous quarter. It made excess provisions of Rs 68 crore on standard assets as non-individual loans rose after two quarters of sluggish performance.

Profit on sale of investments fell to Rs 57 crore from Rs 113 crore a year earlier.

HDFC shares closed 0.55% lower at Rs 1,167.70 on the Bombay Stock Exchange, where the benchmark remained flat.